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  • Non-Residential Stake Holder Payment of Capital Gains Tax
    • 담당부서 : 외투기업고충처리실(고상원)
    • 조회수 : 2,337
  • Organization : Self disposal
  • Regulation : Income Tax Law, Korea-Japan Tax Agreement
Grievance
Grievance
One of the company’s Japanese stake holders will transfer ownership of his/her stock holdings and inquired as to how to handle payment of capital gains tax.

Resoultion and Results
Resolution and Results
Based on Income Tax Law Article 119.12 Capital Gains Tax on Domestic Source Income from Securities applies in such a case of a Japanese shareholder not residing in Korea, a domestically located firm generating income through the transfer of issued stocks

According to Article 13 of Korea-Japan Tax Agreement:
However, should those securities be acquired by a non-resident alien and added to the acquisitions and holdings of a company in a special relationship, at anytime within the tax year in which the transfer of the capital gains generated occurs, if the amount transferred amount is below a 25% ratio of total issued stocks for the domestic firm, or below 5% of the total security transfer ratio for a domestic business entity transferring capital gains, the aforementioned non-resident alien or entity is not libel for payment of taxes on income earned as a result of that transfer.

Action Taken by OFIO:
Our office informed Company C of the fact.